TaxTMI 
TaxTMI 
2011 (12) TMI 51
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....s/2001. 2. Both the appeals were admitted on the following substantial questions of law: (1) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that collection of contingency deposit against payment of sales tax would not form part of the income ? (2) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the depreciation on leased assets can be allowed in a year when the assets had not yet been put to use by the lessee ? Substantial question of law No:1 3. The first question, namely, whether the collection of 'contingency deposit' by the assessee against the payment of sales tax, would form part of the income or not, is no more ....
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.... dated 16.03.2000 was issued to the assessee as to why the depreciation should not be withdrawn. The relevant portion from the said notice reads as follows: "This Office Inspectors have visited the factory premises of M/s.Thiru Arooran Sugars Ltd., at Kollumangudi Village on 11.03.2000, to make on the spot enquiries with regard to the boiler. The enquiries revealed that the said boiler is part of the 110KV/18/MW Co-generation Power Plant. As per letter No.16/BC/96-97 dated 26.03.1997 issued by the Deputy Chief Inspector of Boilers, permission was granted to put to use the boiler for a period of 6 months from 26.03.1997. As already stated, the said boiler is part of the co-generation power plant and the Co-generation Plant wa....
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....6.05.1997. So, the claim of 100% depreciation made by the assessee for the year 1996-97 is not in accordance with the provisions of the Income Tax Act as the boiler had not been put to use before 31.03.1997. The depreciation claim, at best, can be considered only in the subsequent year and not for the year 1996-97. 6. It is the further case of the revenue that the lease rental accrued on the boiler was not accounted as on 31.03.1997. As per the provisions of section 145 of the Income Tax Act, the assessee is supposed to recognise the income on accrual basis. The Board has also issued a Notification No.S.O.69(E) dated 25.01.1996 under section 145(2) of the Income Tax Act. As per these Accounting Standards, accrual refers to the assum....
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.... capitalised net of Modvat credit for Rs.7,70,77,000/- in the books on 29.03.1997, the date of the agreement of lease with TASL. As the boiler (Lignite-cum-Bagasee) is specialised in nature having thermal efficiency above 75%, it is eligible for 100% depreciation as per item III(3)(iii)A(d) of Appendix-1 to the Income-Tax Rules, 1962. The conditions for claiming depreciation under section 32 of the Act has been satisfied in respect of the boiler, as mentioned below: "Ownership: As a lessor and as evidenced from the invoice raised by the BHEL, the assessee is the absolute owner of the asset. User: The boiler has been put to use in the business of leasing vide lease agreement dated 29.3.1997. The lessee, TASL, issued a....
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....ssessment year 31.03.1997, the appellant can claim depreciation only for the subsequent year. But it is the contention of the assessee that the boiler has been installed in the factory of lessee in the month of February, 1997 itself and in support of the same, they relied upon a letter dated 01.07.1997 issued by BHEL, the supplier of boilers. Therefore, since the boiler was installed prior to 31.05.1997, they are eligible for depreciation for the assessment year 1996-97. 11. Whether the assessee is entitled for the depreciation on the assets for the assessment year 1996-97 or for the subsequent year is the question that has to be decided in this appeal. In fact, the judgments relied upon by the learned counsel for the respondent/ass....
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....the premises used by it, or it is an asset or the said machinery or plant is an asset relating to the business carried on by the assessee, as the case may be, section 32A(2B) does not have any such stipulation. That is why the said Karnataka decision CIT v. Shaan Finance (P.) Ltd. [1993] 199 ITR 409, concludes by saying thus (at page 416) : "The benefit is given with reference to the actual user of the machinery, though the benefit may go to a person who does not exploit the machinery himself for manufacturing or producing any article. Such a situation is not entirely unknown in the field of taxation. If the object behind section 32A is understood as to encourage industrial activities and investment in capital goods to facilitate in....